Business Strategies Today

Take Control of Your Business IN THIS ISSUE: TODAY BUSINESS STRATEGIES Total Money Management from the professionals at First National Bank

Vincent J. Delie, Jr. Chairman, President and CEO F.N.B. Corporation First National Bank Between outsized inflation, a difficult labor market, supply chain issues, intensifying regulatory oversight and general economic anxiety, many businesses likely felt a lack of control during recent months. But control — be it over day-to-day operations or long-term prospects — is something business leaders can seize with astute foresight, well-considered planning and the right people in place. In this issue of Business Strategies Today, we’re exploring the concept of “control” and the different ways a business can achieve it. A pair of articles discuss how the best controls are woven into the fabric of a business, including risk management solutions. For example, established risk mitigation strategies are critical for businesses that are vulnerable to natural disasters, such as hurricanes, floods or blizzards. We present recommendations on how to build a layered approach that ensures you are prepared to act and manage risks that could result from unexpected interruptions. Also on the topic of risk management, we break down captive insurance, an alternative solution that companies can use to consistently build their assets. The article explores when it is appropriate to pursue this approach, the options available and how your company can retain and generate underwriting profit. Next, we share how a new international messaging standard for financial institutions will enable businesses to better utilize cross-border payment data to improve internal processes. The behind-the-scenes technology highlights the value of professional partners in maintaining efficient operations. Control is also important in decisions beyond the business world, particularly in how leaders preserve their legacies. With dedicated giving strategies, successful professionals can balance charitable intents with successor benefits and better define the financial impact they can have on their communities and families. At FNB, we understand how important a reliable banking relationship is to empower leaders to achieve their financial goals. By anticipating client needs, identifying personalized strategies and backing it all up with industry-leading digital tools, our highly qualified bankers can help businesses stay right where they belong — in control. THE FIRST NATIONAL BANK DIFFERENCE First National Bank, the largest subsidiary of F.N.B. Corporation (NYSE: FNB), is a growing financial services organization with a long-standing tradition of helping our customers and communities thrive. Throughout more than 150 years of service, we have remained dedicated to providing total money management solutions for our consumer, small business and commercial clients. We have a core business concentration on middle and upper middle market companies and serve their needs as a value-added partner. MORE INSIGHT FROM FNB You can always look to FNB for expertise on the topics and trends that have the greatest impact on you and your business. In Business Strategies Today, experts from across our Company have covered a wide range of subjects, such as making the most of the economic environment, staying the course to innovation and planning for the future of your business. Just a few of the topics we’ve covered recently include: International Expansion Interest Rate Management Payments Solutions Wealth Management Succession Planning Cybersecurity M&A To learn more about topics that may benefit your business, call us at 1-866-362-4603 or visit 02

04 PREPARING FOR UNEXPECTED INTERRUPTIONS ISO 20022: HOW THE NEXT ERA OF CROSS-BORDER PAYMENTS WILL BENEFIT BUSINESSES 08 10 06 ALTERNATIVE RISK SOLUTIONS TAKE CONTROL OF YOUR ESTATE WITH GIVING STRATEGIES FULL-SERVICE SOLUTIONS INSURANCE Property & Casualty Employee Benefits Personal Title WEALTH MANAGEMENT Trust & Fiduciary Retirement Services Investment Advisory Brokerage Private Banking Not FDIC/NCUSIF Insured Not Guaranteed by the First National Bank of Pennsylvania or its affiliates May Lose Value Not Insured by Any Federal Government Agency Not a Bank Deposit First National Bank of Pennsylvania does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice. MARYLAND NORTH CAROLINA OHIO PENNSYLVANIA SOUTH CAROLINA VIRGINIA WEST VIRGINIA DISTRICT OF COLUMBIA FNB Branch/ATM FNB Planned Expansion Branch/ATM FNB Mortgage & Loan Production Offices COMMERCIAL BANKING* Corporate & Business Banking Investment Real Estate Builder Financing Asset-Based Lending Lease Financing Capital Markets Mezzanine Financing Treasury Management International Banking SBA Lending Government Banking CONSUMER BANKING* Deposit Products Mobile & Online Banking Mortgage Banking Consumer & Small Business Lending eStore® Digital Banking Experience * Bank deposit products and services provided by First National Bank of Pennsylvania. Member FDIC. Equal Housing Lender. 03

04 Unexpected interruptions, such as natural disasters, that halt or hinder operations may substantially impact your company’s productivity and profitability. Taking the proper steps to prepare can help mitigate risk, reduce losses and ensure your company has the physical and financial capacity to rebound. PREPARING INTER RUPTIONS UNEXPECTED F O R FNB-ONLINE.COM

COMPREHENSIVE INSURANCE COVERAGE Insurance that insulates your company against the impacts of a natural disaster provides a solid foundation for your total risk management strategy. Be aware of the types of natural disasters you are most likely to encounter based on your location and industry, and then develop a comprehensive and customized insurance strategy that directly addresses the most prevalent threats. Note that not all perils are inherently covered. For example, earthquakes and floods require separate policies. You also should talk with your insurance provider about Business Interruption or Business Income coverage that can help your company meet payroll during interruption and recovery. FINANCING RECOVERY Insurance may not cover every impacted aspect of your operations. Having a clear picture of your company’s finances is essential to building a financial buffer as part of a multipronged approach to risk. Start by examining your current operating expenses, cash flow and liquidity levels. Look for opportunities to set up a “rainy day” fund that can provide, at minimum, the start of a safety net should disaster strike. To bolster those efforts, consider business savings products, such as an FNB FirstRate Business Savings or Money Market Account, that put your money to work for you without restricting access to funds. When damages exceed insurance coverage and liquid savings, it may be necessary to pursue credit options. Your overall capital structure will factor into your borrowing capacity since the debt your business holds will determine the amount of credit you can access. As part of your overall business plan, remain cognizant of how your company uses debt as a financing strategy and realize that, in the event of a significant business interruption, having the ability to take on debt could be the difference between stabilizing your operations or experiencing long-term impacts. PHYSICAL OPERATIONS Preparing, refining and consistently reviewing a business continuity plan is critical. Your plan should address a wide range of topics, including potential threats, loss of electricity, employee safety, communications, points of contact and ongoing training. Based on your company’s focus, the impact of a natural disaster on your physical operating space can vary. If your business is driven by manufacturing or production, for example, the implications are far greater. Even for companies that do or can operate with remote workers, a natural disaster can affect the homes and personal lives of your employees and create significant challenges that indirectly impact your operations. What type of natural disaster is most likely in your location? What are the key roles for each area of your business? Who is the point of contact? What are the minimum requirements (space, equipment, power, etc.) to keep your business functioning? What threats exist to your supply chain? Do you have back-ups? Can all or some employees work remotely? How quickly? Are your network systems/servers in a safe location? Are your paper documents safe? Do you have digital versions that can be easily accessed in the event of loss? How much cash do you have on hand to pay employees and vendors? PREPAREDNESS THOUGHT STARTERS Operation plans also apply to vendors and third-party partners, including your supply chain. If your usual supply chain could be impacted for an extended time, your plan should identify back-up suppliers from regions less likely to experience the same natural disaster. The basis for being able to navigate, stabilize and recover from a disaster starts with a solid overall business plan that is developed by consulting with trusted advisors, like your banker. The experts at FNB have both the knowledge and firsthand experience to help clients plan for the unexpected. FNB offers a variety of customizable insurance solutions for your business through First National Insurance Agency. Explore your options at Call us at 866-362-4603 to start a conversation and discuss how we can support your business now and in the future. 05 BUSINESS STRATEGIES TODAY � FALL 2023

ALTERNATIVE RISK Well-established businesses with consistently low claim volumes can implement greater internal controls, create efficiencies and realize financial benefits with an alternative risk management solution, such as a captive insurance company (captive). With a captive, your business creates an insurance company that it owns, and from which it remains a legally separate entity, to handle designated insurance underwriting needs for the parent company and any subsidiaries. Rather than making premium payments to a third-party insurance provider, you instead pay the policy premiums to the captive, which is typically run by dedicated plan and account administrators to address the necessary regulatory and compliance requirements. The capital accumulated then is used to pay out claims as needed. For companies with the appropriate size, structure and risk appetite, a captive can add a level of predictability to what may be an otherwise unpredictable area for businesses. Additionally, in years when premiums exceed claims, the profit generated opens a variety of wealth building options. You also maintain control over legal representation and claims management. FNB-ONLINE.COM 06

SOLUTIONS Contact us at 800-252-4850 to start the conversation around captive insurance with our experts at First National Insurance Agency. Group captives tend to be a good fit for small and midsize entities. In this case, your business will form a company with other strong businesses to cover a specific insurance line or lines. For example, general liability, workers’ compensation and automobile insurance may be covered under a group captive, and then each company would pursue traditional coverage for the other lines that their businesses require. For large corporations with affiliates, a single-parent captive is created to insure one parent corporation and its various entities. With a single-parent captive strategy, you are afforded greater flexibility in what comprises a policy — from core coverages to specialty lines — based on what best fits the needs of your business. BUILDING A WEALTH-ACCRUING ASSET Of the capital that is annually dedicated to the captive, you will have a portion that is a fixed cost related to operating the insurance company that has been formed. The remainder of the capital is used for paying claims. In a year when you have relatively few claims, the excess cash becomes an asset that, when properly managed, can support other areas of your business. Consider working with one of our trusted financial advisors to maximize return on the profit your business retains based on your risk appetite. If you are thinking about starting a captive insurance company, be sure to consult your attorney regarding legal considerations and your tax advisor to understand any tax regulations or implications. A diverse financial services institution like FNB can help your business successfully develop, implement and benefit from a captive insurance strategy. GETTING STARTED Prepare for a thorough review of your corporate structure and be ready to provide documentation and data detailing the various controls your business deploys to mitigate risk. To begin this process, you may work with an insurance broker who specializes in captives to ensure proper due diligence is completed. During due diligence, an insurance underwriter will closely examine the previous five to 10 years of claims for your business to make informed risk projections. Companies with a sustained period of few or no insurance claims will be in the best position to benefit. It is likely that corporate leadership also will be closely evaluated. Recent or planned changes at the top of the house are of particular interest because new management styles, expectations or shifts in corporate culture could potentially impact previous trends across the business. Additional internal reviews may cover everything from hiring practices, orientation programs and employee safety to cybersecurity and the protocols designed to protect your company’s finances and customer data. STRUCTURING THE APPROACH Once viability has been determined, your company’s size, coverage needs and premium costs will influence the captive structure that is best to pursue. A pair of the more common approaches are group captives and single-parent captives. Regardless of the size or structure, the benefit and goal remain the same — retaining underwriting profit for your high-performing business. The following is meant to provide a high-level example of the financial benefits of group and single-parent companies. It does not represent any specific company or companies. HOW IT WORKS GROUP CAPTIVE Group Captive Insurance Company: XYZ Corporation Insures: 120 separate companies Coverage Premiums Paid Since 2005: $15 million Profit Distributed to Members Since 2005: $12.5 million SINGLE-PARENT CAPTIVE Parent: ABC Corporation Capti ve: ABC Insurance Corporation Insured Entities: 25 affiliate companies Coverage Premiums for 2022: $3.5 million This includes general liability, workers’ compensation, cyber liability and directors’ policies. 2022 Claims Totals: $2.9 million Profit Retained: $600,000 07 BUSINESS STRATEGIES TODAY � FALL 2023


WELCOME TO THE WORLD OF ISO 20022 A new global standard for electronic data interchange between financial institutions, ISO 20022 creates a unified, data-rich format for banks to use when sending and receiving payment information and messages, enabling international transactions to be completed with more proficiency and fewer potential roadblocks. In a business environment, speed, security and efficiency are integral to success, and the standard is expected to support banks in keeping pace with client demands. WHY IS A NEW STANDARD NECESSARY? Today, thousands of banks use a messaging system developed by the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, to facilitate international money and securities transfers, but processing those payments is more difficult when institutions use different digital formats and languages to communicate. With trillions of dollars exchanged through international payments each day, a simple misunderstanding between systems can have significant ripple effects on businesses, including costly delays. ISO 20022, however, creates a single format that accounts for multiple languages and alphabets, making cross-border payments far more efficient and streamlined. The new standard consolidates payment systems and drives down international banking institutions’ operational and infrastructure costs, which can run high with multiple interfaces. It also improves data quality, interpretation and analysis and reduces the need for manual intervention during transactions. Although not explicitly required to do so, banks are strongly encouraged to adopt ISO 20022-based messaging by 2025. SWIFT is already migrating its system to the new standard, and many institutions worldwide, including FNB, are following suit. HOW DOES ISO 20022 AFFECT BUSINESSES? Faster transactions: Reduced translation time may lead to more consistent, reliable cash flow and real-time visibility into daily and short-term cash positions. Streamlining also should reduce transaction costs and fees for clients. More — and better — data: Perhaps most notably, ISO 20022 creates the opportunity for banks to collect more complex, yet easily comprehensible, remittance data. A business’s accounts payable and accounts receivable teams then can use this data to gain clarity about the transaction status, the types of payments being processed and the other parties in a transaction. It also may enable businesses to better forecast short- and long-term liquidity needs, quickly onboard business units in other geographies and gain insights into internal processes. Additionally, banks can use the information to understand how clients are using products and services and better cater future service offerings to their specific needs. Stronger security: Security is paramount in the financial services industry, with firms constantly investing in innovations and upgrades to mitigate and stay ahead of threats. ISO 20022 utilizes enhanced protocols and reporting and will support institutions with authenticating payments, identifying potential fraud and reducing risk. The relative ease of communication also should lessen processing errors that may occur if multiple messaging formats are used. WHAT TO EXPECT For most businesses that frequently perform international transactions, ISO 20022’s impact will be largely invisible. The important piece to know is that the standard is set to create a far more robust and flexible system with great potential to improve operations, even if it occurs behind the scenes. During a domestic transaction, companies’ banks often have preexisting agreements or hold accounts with each other to quickly process a transaction. Institutions from different nations may not have the same relationships, so often in an international transaction, funds must be routed through the central bank in the country of the bank receiving the funds. The bank sending the funds initiates the transaction by sending a request through SWIFT, asking to increase the account balance of the company receiving the funds by the transaction amount. Using the payment information provided via SWIFT, the funds then are routed through the central bank, which accounts for relevant fees and currency exchange rates and completes the transaction. Modern technology has revolutionized business transactions, especially for large cross-border payments, which are often facilitated by banks using the messaging system created by SWIFT. A glimpse at what the process can look like: HOW SWIFT HELPS MONEY MOVE AROUND THE WORLD The global payments ecosystem is on the verge of becoming faster, more secure and more efficient than ever, and while financial institutions will see the impact firsthand, businesses that engage in cross-border and even domestic transactions will reap benefits as well. Contact FNB’s International Banking team at 866-362-4603 to learn more about the transition to ISO 20022 and what it means for your business. 09 BUSINESS STRATEGIES TODAY � FALL 2023

TAKE CONTROL WITH GIVING STRATEGIES OF YOUR ESTATE 10 Among the greatest rewards of professional success is having the resources to make a financial impact on the organizations and causes that you hold dear. However, you may face a threepronged challenge in balancing your retirement income needs, charitable intent and successors’ benefits. Fortunately, there are multiple giving strategies that enable donors to achieve that balance, assert more control over how charitable funds are spent and mitigate the unexpected costs of donations. Consider a pair of advantageous giving vehicles: donoradvised funds and charitable trusts. FNB-ONLINE.COM

DONOR-ADVISED FUNDS High-net-worth business owners or those with generational wealth may consider starting a private foundation to direct charitable endeavors, but a donor-advised fund is a similar strategy that requires less time, money, legal assistance and administration to establish and maintain. Essentially, a donoradvised fund is an agreement between a donor and a separate host organization(s) to create an account in the organization’s fund. Contributions are legally controlled by the organization and irrevocable, but the donor (or a donor’s designee) retains advisory privileges as to how much, when and to which charities grants should be made. The fund determines how the money is spent, but in most cases, the donor’s wishes are carried forth. Perhaps the most appealing aspect of a donor-advised fund is the tax advantage. Generally, donors can take immediate federal income tax deductions of up to 60 percent of their adjusted gross income (AGI) for cash contributions and up to 30 percent for a long-term capital gain property, such as appreciated stock. If a business-owning donor’s company is having a particularly good year or if they are planning to sell that year, contributing some of the extra funds to the donor-advised fund can prevent a major impact from capital gains tax. Additionally, there are no gift tax consequences, and donated funds are removed from the donor’s taxable estate. CHARITABLE TRUSTS Setting up charitable trusts is a more flexible strategy that can enable donors to provide tax-advantaged assets to a charitable organization and establish an income stream for noncharitable beneficiaries, such as a child or other heir, all from a single “split-interest” trust. Depending on how the trust is organized, the income stream may first go to the noncharitable beneficiary, with the remaining assets going to the charity upon the donor’s death or after a specified period (charitable remainder trust). Alternatively, the order of who receives the gift first can go the other direction (charitable lead trust). There also are federal income, gift and estate tax benefits that come with charitable trusts, but the relief may not be quite as significant as it is with a donor-advised fund. Additionally, the process to begin a charitable trust is more complicated and may require an attorney’s assistance. Even with those potential complications, some investors may appreciate the comfort of having a more direct say in how and where their funds are directed. GIVING WITH CARE Charitable giving is a worthy endeavor, and while it is regarded as a selfless act, it is reasonable to give in a way that protects personal wealth. After all, by taking the proper steps to reduce tax loss, there is more to donate and provide to heirs. To learn more about these strategies and others that preserve an estate — for charities and successors alike — reach out to a wealth manager to ensure a successful outcome. The professionals at F.N.B. Wealth Management know how to help you manage, grow and protect your wealth. Call us at 888-824-5833 to start a conversation about your wealth strategies. NO NEED FOR AN RMD? CONSIDER THIS TAX-FREE SOLUTION By the time a business owner who has a traditional individual retirement account (IRA) retires, it’s possible that the account will have accrued more funds than are needed to maintain the retiree’s lifestyle. However, a taxable Required Minimum Distribution (RMD) must be distributed from the IRA annually beginning at age 70 ½, 72, 73, or 75, depending on the retiree’s date of birth. If the RMD is not needed for the retiree’s personal expenses, they may take the distribution and subsequently donate it. In that scenario, the RMD is considered a taxable distribution. A Qualified Charitable Donation (QCD), on the other hand, goes directly from the IRA to charity and can be excluded from AGI (up to $100,000 for a single filer). To make a QCD — which becomes eligible at 70½, regardless of RMD status — a donor simply instructs their IRA trustee to make the distribution to a qualified charity. 11 BUSINESS STRATEGIES TODAY � FALL 2023

President’s “E” Award for Export Service Data as of September 1, 2023 FNB10-261 EQUAL HOUSING LENDER | NMLS #766529 | MEMBER FDIC More bank for my buck. We’re committed to helping the business community do more. We offer a broad array of sophisticated products and solutions, local expertise, and personal assistance to help businesses of all sizes achieve more of their goals. And with our superior capital position, credit reserves and liquidity management, FNB has the strength and stability to be there for our clients through all economic cycles. To learn — and get — more, visit ATMS 1350+ TOP 50 90+Excellence and Best Brand Awards SINCE 2011 Nearly $45 billion NEARLY $34 Billion in assets in DEPOSITS Approx. 350 Branches Approx. 4200 Largest U.S. Bank Holding Companies Coalition Greenwich EMPLOYEES